Wordpress now uses something called 'featured images' (do a google search and you can read about it) in place of thumbnails. I thing there is a plugin that will generate them for you.
There is a known bug in the fade in/out code that overlays the blog title. You may even see the image jump a little. The author of the code has stopped developing it and acknowledges the bugs, so what you see is what you get
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Juggledad | Forum Moderator/Support